Life Insurance for Millennials

Millennials are people who were born between 1981 and 1996. In 2021, millennials are between the ages of 25-40.

The COVID-19 pandemic became a catalyst for many Americans who had been putting off buying life insurance. As the number of COVID-19 cases grew, life insurance companies saw a surge in applications from a wide variety of people across the country, including millennials. The number of life insurance applications in 2020 grew 7.9% YOY for Americans 44 and younger, according to research firm MIB Group, a data-sharing service for insurance companies.

Find out more about life insurance for millennials below.

Why Millennials Should Buy Life Insurance

The earlier millennials buy life insurance, the more likely they are to get a competitive rate for their premiums. The best time for millennials to buy life insurance is when they’re young and healthy because rates and premiums should be the least expensive. Many insurance companies provide great policy options for millennials who want to create a financially sound investment while protecting their loved ones from losing any income as a result of their death.

Below are some reasons millennials buy life insurance policies:

Income replacement: If someone depends on their income to survive, life insurance provides solid financial stability because it replaces the insured's income if they die unexpectedly.
Funeral costs and final expenses: A life insurance policy can help pay for funeral expenses, which generally include burial and an obituary, probate fees, debts and healthcare costs not covered by other insurance policies.
Wealth transfer and inheritance: A life insurance policy may transfer wealth and other assets to dependents and loved ones named as beneficiaries in the life insurance policy.
Payment for estate taxes and other fees: Policy benefits can be used to pay estate taxes so that beneficiaries don't have to worry about using other assets to cover the expenses.
Charitable contributions: Many people opt to make a charity the beneficiary to their life insurance policy.
Savings: Some life insurance policies have a cash value so that if they are not used as a death benefit, policyholders can withdraw or borrow funds from the plan.

The Average Cost of Life Insurance for Millennials

According to the Insurance Information Institute, 44% of millennials overestimate the cost of life insurance — over five times the actual cost, in some cases. The reality is that life insurance is affordable, especially if you’re in good health.

For example, a 25-year-old millennial can buy a $500,000 life insurance policy for as little as $25 to $30 per month. A 35-year-old millennial can buy a $500,000 life insurance policy for as little as $35 per month.

The cost for monthly or annual premiums for millennials depends on several factors:

Age: The cost of insurance increases as you get older.
Gender: Women tend to live longer than men, and therefore they generally pay less.
Health: Generally, people in good health pay less than those who have preexisting conditions or other medical ailments.
Smoking: Smokers generally pay higher life insurance premiums compared to nonsmokers.
Policy type: Life insurance comes in several types, and they all vary in cost. For instance, term life insurance usually doesn't cost as much as permanent life insurance because it covers the policyholder for a certain amount of time rather than for their entire life. The coverage amount also plays an important part too — a $250,000 term life policy is generally going to cost less than a $750,000 permanent policy.
Hobbies: Dangerous hobbies, such as skydiving and bull-fighting, typically mean higher monthly premiums.